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‘Tis Better To Have Invested And Lost Than Never To Have Invested At All

Money is hard to figure out. Even after reading books, blogs, and listening to some major gurus talk about it, I still find it to be a very hard concept to not only grasp, but to explain. But when it makes sense, oh is it glorious. The first time money started to make sense to me was when I graduated High School.

My last semester of High School I took a finance class and my teacher stressed to us every day that we could all be millionaires in 50 years if we just started investing now. So when graduation came around, I took all the money I got from my family for graduation ($500) and headed to the family stock broker, Phil. We set up a 5 year strategy in mostly mutual funds. My plan was to completely write it off and pretend like I didn’t even have the money to begin with, which worked… sorta.

Well 5 years rolled by and guess what? The entire global economy crashed and I only had $293 left. Shoot! I’m not even kidding you when I say that it was literally timed perfectly for me to lose the most amount of money as possible… So naturally, I had to laugh. I mean you have to admit, when things go so perfectly wrong, what else is there to do?

Don’t get me wrong, losing $300 is nothing to cry about (you might even argue I got off quite well compared to most) but let’s just say my first real world experience with investing didn’t go so hot.

Regardless, I ended up leaving my money where it was anyway. The one thing that did go right with my first shot at investing is that during those 5 years I really did forget the money existed, so I just rinsed and repeated and reinvested my small fund.

But this experience begged the question… why risk it? It’s so hard to have enough money for anything, why would I want to risk losing it all by “investing” it? The answer comes in the form of another question: Where would that $500 be today if I had never invested it? And the answer to that question (lost yet?) is restaurants, movie theaters, Starbucks, etc. I would have spent every last penny a very long time ago. So it’s a good thing I locked it up before I had a chance to throw it all away. Because I definitely would have.

But what about a CD or something without downside risk? With that at least I wouldn’t have lost any money, right? Technically not, but with a CD I wouldn’t have gotten the opportunity for upside. Which to me, is worth the risk. I can comfortably say this even knowing now that I lost money. In my opinion putting money in a CD instead of some sort of security (stock, bond, ETF, etc) is like never wearing your favorite shirt for fear it might rain. It’s safe, but what’s the point? Not to not bad mouth CD’s, (they have their place) but the opportunity lost is huge.

What about you? What was your first real world experience with money? Was it better than losing over half of your first investment (like me)?